Correlation Between BANK RAKYAT and NEO PERFORMMAT
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and NEO PERFORMMAT at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BANK RAKYAT and NEO PERFORMMAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK RAKYAT IND and NEO PERFORMMAT, you can compare the effects of market volatilities on BANK RAKYAT and NEO PERFORMMAT and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BANK RAKYAT with a short position of NEO PERFORMMAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and NEO PERFORMMAT.
Diversification Opportunities for BANK RAKYAT and NEO PERFORMMAT
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BANK and NEO is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and NEO PERFORMMAT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEO PERFORMMAT and BANK RAKYAT is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BANK RAKYAT IND are associated (or correlated) with NEO PERFORMMAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEO PERFORMMAT has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and NEO PERFORMMAT go up and down completely randomly.
Pair Corralation between BANK RAKYAT and NEO PERFORMMAT
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the NEO PERFORMMAT. But the stock apears to be less risky and, when comparing its historical volatility, BANK RAKYAT IND is 1.05 times less risky than NEO PERFORMMAT. The stock trades about -0.04 of its potential returns per unit of risk. The NEO PERFORMMAT is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 511.00 in NEO PERFORMMAT on September 21, 2024 and sell it today you would earn a total of 10.00 from holding NEO PERFORMMAT or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK RAKYAT IND vs. NEO PERFORMMAT
Performance |
| Timeline |
| BANK RAKYAT IND |
| NEO PERFORMMAT |
BANK RAKYAT and NEO PERFORMMAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and NEO PERFORMMAT
The main advantage of trading using opposite BANK RAKYAT and NEO PERFORMMAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, NEO PERFORMMAT can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in NEO PERFORMMAT will offset losses from the drop in NEO PERFORMMAT's long position.The idea behind BANK RAKYAT IND and NEO PERFORMMAT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| NEO PERFORMMAT vs. Albemarle | NEO PERFORMMAT vs. Superior Plus Corp | NEO PERFORMMAT vs. SIVERS SEMICONDUCTORS AB | NEO PERFORMMAT vs. Norsk Hydro ASA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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